Critical Minerals Governance for Electricity Systems

Detailed Explanation With Case Laws

1. Introduction

Critical Minerals Governance for Electricity Systems means the legal, regulatory and institutional framework used to ensure that electricity systems have reliable and sustainable access to minerals needed for generation, transmission, distribution, storage and grid modernisation.

Modern electricity systems depend on materials such as copper, aluminium, lithium, graphite, nickel and certain rare earth elements. These materials may face supply risks because of geographical concentration, limited processing capacity, geopolitical tensions, environmental constraints or rapidly increasing demand.

Therefore, electricity governance increasingly needs to consider not only electricity supply, but also the material supply chains supporting electricity infrastructure.

2. Meaning of Critical Minerals Governance

Critical-mineral governance involves several stages:

Identification → extraction → processing → transport → manufacturing → use → recycling → reuse

Government institutions may regulate these stages through:

mining laws;

environmental laws;

electricity legislation;

trade rules;

foreign-investment screening;

procurement rules;

recycling requirements;

competition law; and

strategic planning.

The objective is to ensure that a shortage of important minerals does not become a major obstacle to electricity-system development.

3. Why Electricity Systems Need Critical Minerals

Different electricity technologies require different materials.

Copper

Copper is extensively used in:

transmission and distribution cables;

transformers;

generators;

substations; and

electrical equipment.

Aluminium

Aluminium is widely used in overhead transmission infrastructure because of its relatively low weight and electrical conductivity.

Lithium and Graphite

These are important for many battery-storage technologies.

Nickel and Cobalt

Some battery technologies use significant quantities of these materials.

Rare Earth Elements

Some wind turbines and electric motors use permanent magnets containing rare earth elements.

Thus:

Critical minerals → electricity infrastructure → energy security → energy transition.

4. Institutional Governance

Effective governance requires coordination among different institutions.

Important actors may include:

energy ministries;

mining ministries;

electricity regulators;

environmental authorities;

competition authorities;

trade authorities;

national-security agencies;

grid operators; and

recycling regulators.

For example, an electricity regulator may plan grid expansion, while a mining authority regulates mineral extraction.

Without coordination, a country could approve major electricity projects without considering whether sufficient materials are available to build them.

5. Critical-Mineral Identification

Governments normally create lists of minerals considered critical or strategic.

However, criticality is not permanent.

A mineral can become more important because:

demand increases;

a new technology becomes widespread;

supply becomes concentrated;

processing capacity becomes restricted; or

substitutes become less available.

The EU Critical Raw Materials Act 2024 establishes lists of critical and strategic raw materials based on economic importance and supply risk.

This provides a legal basis for targeted governance rather than treating every mineral in exactly the same way.

6. Supply-Chain Security

A major objective is to reduce excessive dependence on one supplier.

Governments can use:

Diversification

Developing relationships with several producing countries.

Domestic Production

Supporting responsible domestic extraction.

Processing Capacity

Developing refining and processing facilities.

Recycling

Recovering minerals from used batteries, electrical equipment and renewable-energy infrastructure.

Strategic Reserves

Maintaining stocks of particularly important materials.

The EU Critical Raw Materials Act combines several of these approaches through targets for extraction, processing and recycling and through its Strategic Projects framework.

7. Link with Electricity Planning

Critical-mineral governance should be connected with electricity-system planning.

Suppose a country plans to build:

thousands of kilometres of transmission lines;

large battery-storage systems;

renewable-generation capacity; and

new substations.

The government should assess the mineral requirements of these projects.

This produces a useful planning chain:

Electricity demand forecast → infrastructure requirement → material requirement → supply-risk assessment → procurement and investment strategy.

This is an important development in modern energy governance.

8. Case Law: China — Rare Earths

The leading international authority is China — Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, WTO disputes DS431, DS432 and DS433.

China imposed measures including:

export duties;

export quotas;

export licensing requirements; and

restrictions on trading rights.

The United States, EU and Japan challenged the measures.

The WTO Panel and Appellate Body found that the challenged measures were inconsistent with China's WTO obligations and that the relevant exceptions did not justify them.

Relevance to Electricity Governance

Rare earth elements are important for some electricity technologies, including certain permanent-magnet applications.

The case demonstrates that governments have legitimate interests in managing natural resources, but criticality alone does not automatically make trade restrictions lawful.

Governance must operate consistently with international legal obligations.

9. Environmental Governance

Mineral extraction can have significant environmental consequences.

Critical-mineral governance must therefore include:

environmental-impact assessment;

water management;

pollution controls;

biodiversity protection;

mine rehabilitation; and

waste management.

This creates an important legal balance:

secure mineral supply

and

sustainable mineral production.

Increasing supply without environmental safeguards may create long-term social and ecological costs.

10. Case Law: VYSOČINA WIND

In VYSOČINA WIND a.s. v Česká republika, Case C-181/20, the Court of Justice of the European Union considered the application of EU waste legislation to photovoltaic panels and questions concerning the costs of collection, treatment, recovery and environmentally sound disposal.

Relevance

Electricity governance cannot stop at the construction stage.

Solar panels eventually become waste, and their materials may be recoverable.

The case therefore supports a broader governance approach:

Production → operation → end-of-life management → recovery of materials.

This is particularly important for critical minerals and the circular economy.

11. Recycling Governance

Recycling can provide a secondary source of critical minerals.

Examples include:

Used battery → collection → treatment → mineral recovery → new battery

and

Old electrical equipment → material recovery → new grid equipment.

The EU Critical Raw Materials Act establishes a 2030 benchmark aimed at developing EU recycling capacity for strategic raw materials.

Recycling governance may therefore involve:

producer responsibility;

collection requirements;

recycling targets;

material reporting;

traceability; and

recovery standards.

12. Foreign Investment Governance

Foreign investment can bring capital and technology into critical-mineral industries.

However, governments may examine investments where ownership of a mine, refinery or processing company could create national-security or supply-chain risks.

Investment screening may therefore be relevant to:

critical-mineral mines;

processing facilities;

battery-material producers;

recycling companies; and

strategically important mineral technologies.

The aim is not necessarily to prevent foreign investment, but to ensure that strategically sensitive ownership risks are properly assessed.

13. Competition Governance

Critical-mineral markets can become vulnerable to excessive concentration.

If a small number of companies control:

mining;

processing;

refining; or

recycling,

market concentration could potentially affect prices and supply.

Competition authorities may therefore need to examine:

mergers;

acquisitions;

market dominance;

restrictive agreements; and

supply arrangements.

This is particularly important where one part of the supply chain is controlled by only a small number of firms.

14. Strategic Projects

Governments may identify certain mining, processing or recycling projects as strategically important.

Such projects may receive:

coordinated permitting;

infrastructure support;

investment assistance;

financing support; or

accelerated administrative procedures.

The EU Strategic Projects framework under the Critical Raw Materials Act is an example.

However, accelerated approval should not mean that environmental or public-law requirements disappear.

15. Trade and International Cooperation

No country can easily produce every critical mineral domestically.

International cooperation is therefore essential.

Governments may establish:

bilateral mineral partnerships;

supply agreements;

research cooperation;

recycling partnerships;

technology-sharing arrangements; and

diversified import relationships.

This creates a governance model based on resilience rather than complete self-sufficiency.

16. Role of Electricity Regulators

Electricity regulators traditionally focus on:

reliability;

network access;

tariffs;

market regulation;

consumer protection; and

system security.

Increasing mineral dependence may require regulators and system planners to consider material supply risks when assessing major infrastructure programmes.

For example, procurement rules for transformers, cables and batteries could consider:

supply concentration;

material availability;

recycling;

supplier diversity; and

long-term resilience.

17. Main Principles of Critical-Mineral Governance

A strong framework should include:

1. Strategic Identification

Regularly review which minerals are critical.

2. Supply Diversification

Avoid excessive dependence on one source.

3. Domestic Capability

Develop appropriate mining and processing capacity.

4. Recycling

Treat waste as a source of secondary materials.

5. Environmental Protection

Ensure responsible extraction and processing.

6. Investment Screening

Assess strategic ownership risks.

7. Competition

Prevent harmful market concentration.

8. International Cooperation

Develop reliable international supply relationships.

9. Transparency

Maintain reliable data about supply chains.

10. Long-Term Planning

Connect mineral policy with electricity-system planning.

18. Conclusion

Critical Minerals Governance for Electricity Systems represents an emerging area of energy law in which mineral policy and electricity regulation increasingly overlap.

Modern electricity systems require reliable access to materials for:

transmission;

distribution;

transformers;

renewable generation;

battery storage; and

grid modernisation.

The EU Critical Raw Materials Act demonstrates a comprehensive governance approach based on extraction, processing, recycling, diversification and strategic projects.

The WTO China — Rare Earths dispute shows that governments may have legitimate resource and environmental objectives, but critical-mineral measures must still comply with international trade obligations. The VYSOČINA WIND judgment further demonstrates the importance of managing renewable-energy equipment throughout its entire life cycle, including recovery and disposal.

Therefore, effective critical-mineral governance should not focus only on mining more minerals. It should create a complete legal framework covering supply security, responsible extraction, processing, investment, trade, electricity planning, recycling and international cooperation. This integrated approach helps ensure that shortages of critical materials do not become a barrier to reliable electricity infrastructure or the wider energy transition.